An Overview of Big Push Model - Essay Example

Big Push Model An Overview Introduction "Jeffrey Sachs is that rare phenomenon: an academic economist famous for his theories about why some countries are poor and others rich and also famous for his successful practical work in helping poor countries become richer. In this long-awaited, fascinating, clearly and movingly written book, he distills his experience to propose answers to the hard choices now facing the world (Diamond) (1) Aiming for improvements in social and economic indicators in developing countries by the year of 2015, the Big Push model has returned to favor in the development policy-making community, after half a century of exile in 2005. The big push model set eight Millennium Development Goals (MDGs), which are comprised of 18 targets for social and economic welfare of developing countries. The UN Millennium Project, commissioned by Kofi Annan to assess how to meet the Millennium Development Goals set for 2015 emphasizing on the “poverty trap” of poor countries .The Millennium Project recommends a series of technical interventions, such as planting nitrogen-fixing leguminous trees, distributing bed-nets to protect against malaria, giving fertilizer to farmers, building health clinics, constructing battery-charging stations, giving each village a truck and a truck repairman, etc. (UN Millennium Project ,2005)(2) The emergence of big push, UN Millennium Project and subsequent MDGs may invite a massive response in relevant areas, but the name of Jaffrey Sachs, the main orator of this big push model and his contributions in this field are unforgettable. In this context we shall analyze the background of Jeffrey Sachs, its findings and the concept of big push in detail. Additionally we shall examine how far the views of Jeffrey Sachs on big push affect the substantial developments in Africa. ------------------------------------------------------------------------------------------------------------ 1. Jared Diamond, Pulitzer Prize winning author of Guns, Germs and Steel and Collapse 2. UN Millennium Project (2005), Overview Report,, p. 19 2 Jeffrey Sachs and his works As a special Advisor to United Nations Secretary-General Kofi Annan on the Millennium Development Prof. Goals, Jeffrey Sachs played a crucial role in the internationally agreed goals to reduce extreme poverty, disease, and hunger by the year 2015. Sachs is also President and Co-Founder of Millennium Promise Alliance, a nonprofit organization aimed at ending extreme global poverty. (The Earth Institute Directory, 2007) (3) He is widely considered to be the leading international economic advisor of his generation. Professor Sachs has always been in the head of the challenges of economic development, poverty alleviation, and enlightened globalization, promoting policies to help all parts of the world .His view was there can be some benefit from expanding economic opportunities and wellbeing. Moreover he played a key role in combining economic development with environmental sustainability, and as Director of the Earth Institute leads large-scale efforts to promote the mitigation of human-induced climate change. In his book “the End of Poverty” Prof. Jeffrey Sachs tried to explain his own strategies for eradicating poverty by 2025 effectively. (Easterly, 2005) (4) According to Prof. Jeffrey Sachs the new millennium model of big push must be extended so that the rich countries need to help poor countries to make certain practical investments that are often really very basic. This is the basic difference between the big push model of 1950’s and 60’s and new millennium model. Once the development issues are on light, there are tremendous things can be solved and also that can be done. (5)( mother (Jones,2005)He always speak enthusiastically other main goals of big push of basic investments between now and 2015 in public administration, human capital, nutrition, ------------------------------------------------------------------------------------------------------------ 3. The Earth Institute Directory,(2007) Columbia University, Prof. Jeffrey Sachs, Director 4. William Easterly, (2005) Reliving the ‘50s: the Big Push, Poverty Traps, and Takeoffs in Economic Development, Centre for Global development, Aug 5. The End of Poverty (2005) An Interview with Jeffrey Sachs,Onnesha Roychoudhuri, Mother Jones, May 6 3 health, education and key infrastructure roads, electricity, ports, water and sanitation accessible land for affordable housing, environmental management. (UN Millennium Project, 2005) (6)He out lined the importance of required investment for health and sanitation as, if there is clinic but no safe drinking water, or if there is safe drinking water and a clinic, but no bed nets to fight malaria, there can not fulfill one’s needs and there can never be a quality of life . He always justified the big push of basic investments to authenticate MDGs as it is not proposal for a single global plan dictated by some UN central command instead of that it is a proposal that we help people help themselves .This can be done without legions of people rushing over to the developed countries to build houses and schools, but the people in their own communities can do if some resources are allocated to them to do it. (Easterly, 2005)(7) From the above, it can be seen that Prof. Jeffrey Sachs has made an inspiring effort to bring the big push into light. Now we shall analyze the aspect of big push model and contributions of Prof.Geffrey in this sphere. Big push Model President John Kennedy once told that those peoples in the huts and villages across the globe struggling to break the bonds of mass misery, so our best efforts should be to help them help themselves, for whatever period is required—not because the Communists may be doing it, not because we seek their votes, but because it is right. If a free society cannot help the many who are poor, it cannot save the few who are rich. This showed that the model of big push was given due consideration. A Big Push involves a combination of a big increase in foreign aid, a simultaneous increase in investment in many different sectors, as well as a package of complementary policy changes and technical interventions, and a national plan and administrative apparatus to direct the investments, ------------------------------------------------------------------------------------------------------------ 6. ibid 2 7. ibid 4 4 technical interventions, and policy changes.( Mother Jones ,2005)(8)The World Bank and IMF issued a joint report on the Millennium Development Goals in April 2005, calling for “a big push in aid” They call upon developing countries and foreign aid donors to implement the Big Push . Jeffrey Sachs reverberates on big push that a combination of investments well attuned to local needs and conditions can enable African economies to break out of the poverty trap. These interventions need to be applied systematically, diligently, and jointly since they strongly reinforce one another. Sachs called upon developing countries to have an “Investment Plan, which shows the size, timing, and costs of the required investments” as well a “Financial Plan to fund the Investment Plan, including the calculation of the Millennium Development Goals Financing Gap, the portion of financial needs the donors will have to fill.” (Easterly, 2005)(9) Even though the UN millennium project of MDGs and Prof. Sachs goals manifests as a well targeted, the question regarding achieving the substantial development of this idea of scalping the aid to developing countries; particularly African countries still hang about. Controversies The serious issue in this regard is the state intervention in the poor economies than the advocates of the Big Push do now. Moreover the question arises that Even if Africas governments had the best will in the world, could they use such big sums of money? A country can “absorb” only so much aid, even if the money flows as freely as water. For e.g. Donor money helped ------------------------------------------------------------------------------------------------------------ 8. ibid 5 9. ibid 4, 7 5 Malawis primary schools scrap their fees in the early 1990s. But the schools soon succumbed to “access shock”, 1.2m extra pupils sitting at the feet of teachers working double or triple shifts. Some of spokesperson of donors argue for spending less enumerate that if there is no one to teach the students there is no need to pay for every child to go to school. On the other hand the donee‘s notion that if spending is more, then the more teachers can be trained. The fact is by 2001 Malawi had more than 27,000 extra teachers. The World Bank estimates that a country such as Niger needs to train about 8,000 teachers a year from now until 2015 to meet its needs. It currently trains just a tenth of that number. (Sachs, 2006)10) Another question regarding the extension of these goals is Do “Big Pushes” work? Does economic development happen mainly through Big Pushes? We can take three elements here, the Big Push, the Poverty Trap, and the Takeoff. In the traditional development narrative which shows that recently big push increased aid and investment to emerge, after which they will have a takeoff into self-sustained growth. But one could find evidence for poverty traps, but not for takeoffs, or vice versa. One could accept poverty traps, but still not believe in a Big Push to be implemented by the aid agencies. Also the particular form of poverty trap here is restricted – it is one of stagnation, zero per capita growth, which does not rule out other possible poverty traps. The specificity of the classic development narrative makes it easier to test, and it is worth testing given its current popularity in policy debates. (The Economist, 2005)(11) Another related problem of big push is with plans is one of incentives. In foreign aid and in many other planning situations, the planner is not accountable to the planned and so does not internalize the costs and benefits of action. To make things even worse, many different foreign aid donors are contributing to the Big Push, which further weakens the ----------------------------------------------------------------------------------------------------------- 10 Jeffrey Sachs, (2006) The End of Poverty p. 208,p. 273The Penguin Press, 11. the Economist,(2005) Years of mistakes have taught donors a bit about how to spend aid money better, Jun 30th 6 incentive of any one donor through the usual collective action problems. Even if the planner has good incentives, plans can be decreed at the top, but must be implemented at the bottom. Apart from this, the issue regarding design of the principle –agent in order to give good incentives for aid agency officials and government civil servants to do the interventions right and get results for the poor arise s in the case of big push. This problem is particularly severe in foreign aid, when the actions and outcomes at the bottom are often unobservable to the administrators at the top, and where corruption is a problem in the civil service of poor countries. (Easterly, 2003)(12) Moreover the macroeconomists warn that unless the aid is managed skillfully, there is a real danger of adverse macroeconomic effects. Against the median ratio of aid to GNI of 22% in 2004, it is possible to illustrate that the potential increase that would result from the promised doubling of aid by 2010, using alternative growth rates for GNI, it will be follows;- 2 GNI growth rate of 4% p.a., aid/GNI ratio in 2010 of 35% p.a.; GNI growth rate of 7% p.a., aid/GNI ratio of 29% p.a. i.e it can be estimated that the number of low-income countries with ratios of aid to total government spending in excess of 50% would rise from 22 (out of 52) in 2003-4 to 35 in 2010, with the number in excess of a 75% ratio going up from 11 to 17.3 Coming on top of these already high levels of dependence, an aid surge on the scale illustrated, could not fail to have large balance-of payments, monetary and fiscal consequences, posing real challenges for macroeconomic management. (Killick , Foster ,2007)13) Precisely it can be noted that if the MDGs are not held appropriately it may affect ------------------------------------------------------------------------------------------------------------ 12. Easterly (2003) summarize some of this research 13. Tony Killick and Mick Foster ,( 2007)The Macroeconomics of Doubling Aid to Africa and the Centrality of the Supply Side , Development Policy Review, 25 (2): 167-192 adversely for developing countries. But the balance between the utilization of aid, direct productive activities and social services are maintained in order to avoid a transitory loss in competitiveness, and then this project may turn to be successful. Conclusion It is no doubt that Prof. Jeffrey Sachs‘s big push and the UN millennium project will break the poverty trap in developing countries by applying the investment policy. But how far it goes ahead with the support of donors is unpredictable. But the fact is that the antagonists are also started relying on this project. The a prominent academic critic of aid, Professor william Easterly who smacked the big push model severely reluctantly acknowledged and said that foreign aid likely contributed to some notable successes on a global scale, such as dramatic improvement in health and education indicators in poor countries. He further said that to get the poorest people in the world such obvious goods as the vaccines, the antibiotics, the food supplements, the improved seeds, the fertilizer, the roads, the boreholes, the water pipes, the textbooks, and the nurses. This is not making the poor dependent on handouts; it is giving the poorest people the health, nutrition, education, and other inputs that raise the payoff to their own efforts to better their lives.( Easterly ,2007 )(4) ************************* ----------------------------------------------------------------------------------------------------------- 14. William Easterly (2007) "Bah, Humbug" attack on foreign aid, The White Mans Burden, page 176, Penguine Books. Bibliography Books and Authors 1. Allen, Tim & Thomas, Alan (2000) Poverty and Development, 2Rev Ed edition 6 Jan Oxford University Press; ISBN-13: 978-0198776260 2. Jeffrey Sachs, the End of Poverty (2006) p. 208, p. 273 the Penguin Press, New York 3.Tony Killick and Mick Foster ,The Macroeconomics of Doubling Aid to Africa and the Centrality of the Supply Side , (2007) Development Policy Review, 25 (2): 167-192 Journal and Publications 4. Mother Jones, (2005) the End of Poverty: An Interview with Jeffrey Sachs, Onnesha Roychoudhuri, and May 6 5. the Economist, (2005) Years of mistakes have taught donors a bit about how to spend aid money better, Jun 30 6. William Easterly reliving the ‘50s: the Big Push, Poverty Traps, and Takeoffs in Economic Development, (2005), Centre for Global development, Aug. 7. William. Easterly,( 2003 )“Can Foreign Aid Buy Growth?”, Journal of Economic Perspectives, Summer 2003 8. UN Millennium Project, (2005) Overview Report, 2005, p. 19 9. UN Millennium Project Report, Investing in Development: A Practical Plan to Achieve the Millennium Development Goals: Main Report, United Nations: New York, 2005. Read More